Business leaders’ appeasement on climate change: What can they do?

Business leaders’ appeasement on climate change: What can they do?

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President Trump withdrew the United States from the 2015 Paris climate accord, receiving prompt condemnation from environmentalists, media, heads of other governments—and business leaders. You can certainly understand the fury of the environmentalists and a large part of the media that have long since abandoned objective journalism for environmental advocacy. And other government leaders naturally want the U.S. to do its share of penalizing its businesses and citizens with carbon taxes and high electricity prices (due to banning fossil fuels and subsidizing unreliable energy sources such as solar and wind).

But business leaders—why are they condemning Trump’s withdrawal from Paris?

You would think that the CEOs of the dozens of the major U.S. companies—such as Amazon, Apple, Google, Microsoft, Mars, Procter & Gamble, and even the oil and gas giants ExxonMobil and ConocoPhillips—would understand that the Paris accord is not beneficial to people nor to business.

As Lawrence Solomon explains in an excellent Financial Post column, “the Paris accord always was a sham” where the participating countries agreed to voluntary carbon emission targets while continuing massive coal and shale gas development projects. Yet, the accord was sold to the public as a mandatory carbon reduction program, justifying new carbon taxes, banning of coal, and generous subsidies to solar and wind production—all in the name of saving the planet from dangerous  carbon “pollution.”

Drawing from the findings of numerous scientific studies—as opposed to the countless models that have failed to predict climate change, Solomon concludes: “Contrary to the bad press that carbon dioxide receives, this colourless, odourless and tasteless gas is no pollutant. Carbon dioxide, nature’s fertilizer, is instead an environmental boon, responsible for greening the planet.”

The majority of the leaders of major corporations most likely are intelligent enough to understand (one would hope) the positive impact of CO2 on climate, a healthy planet, and human flourishing. Only a handful are likely to be evaders of facts and true believers in a catastrophic man-made climate change—for which there is no evidence.

What then explains the CEOs’ pledging their companies’ commitment to uphold the Paris carbon emission targets despite the U.S. government withdrawal from the accord? And why does virtually no CEO of a publicly traded company challenge the commitment to reduce emissions?

I think these CEOs, while understanding that the claims of catastrophic climate change are not based on science, recognize the reality of popular opinion—which, unfortunately, is not based on science.

Should the CEOs challenge the public belief in catastrophic man-made climate change, the backlash would be furious. They would be labeled “climate deniers,” and their companies would face public condemnation, consumer boycotts, as well as difficulties in entering new markets and in attracting investment.

While I don’t think the enthusiastic—and pretentious—embrace of “climate action” by the likes of Elon Musk of Tesla and Jeffrey Immelt of GE (whose companies stand to benefit from such an embrace, through government largesse) is moral, its motivation is not difficult to understand.

The CEOs jumping on the “climate action” bandwagon make a pragmatic calculation: the government interference in the economy—through carbon regulations and taxes and subsidies for the unreliable renewables—creates opportunities to profit for those companies willing to appease and to take advantage of the government-created “opportunities.” True to pragmatism, they ignore the ruinous long-term consequences for human flourishing, including that of their own companies.

The role of the CEO is to create wealth for their shareholders. In the current context of climate change delusion and government-controlled economies, challenging the government regulation and the public opinion of climate change would be ruinous on the short and even on the medium term to the companies’ ability to operate profitably. Besides, it is the shareholders who ultimately determine the company’s direction, including “climate action.”

But the CEOs have alternatives to the phony embrace of reducing carbon emissions. They can focus on doing what business does best: producing and trading material values that make all of our lives better and not embracing climate alarmism. The majority of the CEOs already does this.

It is not the business leaders’ role to educate the public about climate science, but they can contribute to such education by donating to objective science education programs at schools and universities that still offer them. They can also support educational think tanks, such as the Center for Industrial Progress, that offer objective information about climate.

That may eventually help end climate alarmism and governments’ stranglehold on human flourishing.

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One Response

  1. Yes, fear is a key motivator, but it is a bad choice because:
    – environmentalists are ratcheters, once they know they “can have you” they’ll be back again and again
    – boards and executives are overlooking the silent majority. In the US a majority of people are not concerned about the notion that humans are ruining the climate. I think Trump knows that. (The proportion is not as high in Canada but the voters are there in numbers.)
    – There’s a strategic gain in facilitating more petroleum production in the US, pipelines in Canada and the US, and the proposed natural gas pipeline from Israel/Syria/Turkey into northern Europe. Those efforts will reduce income to Middle Eastern states and Russia, plus reduce dependence of western Europe on natural gas from Russia. That reduces the power of those unfree states

    There is a problem of government getting in the way of people, politicians and bureaucrats will discriminate against those whose ideas they don’t like.

    Note that ExxonMobil was opposing climate alarmism, when led by Rex Tillerson (see your June 19, 2016 article), he is now an official of the US government, in which role he is probably a key person for international agreements.

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Jaana Woiceshyn teaches business ethics and competitive strategy at the Haskayne School of Business, University of Calgary, Canada.

She has lectured and conducted seminars on business ethics to undergraduate, MBA and Executive MBA students, and to various corporate audiences for over 20 years both in Canada and abroad. Before earning her Ph.D. from the Wharton School of Business, University of Pennsylvania, she helped turn around a small business in Finland and worked for a consulting firm in Canada.

Jaana’s research on technological change and innovation, value creation by business, executive decision-making, and business ethics has been published in various academic and professional journals and books. “How to Be Profitable and Moral” is her first solo-authored book.

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